Account structure for property manager?

[Simon Cox]

Hey everyone,

I'm in the process of setting up a management agreement between myself and a fellow investor for a specific property. I needed some guidance as to the best way to set up the accounts related to the property. 

I currently have an account under an LLC (which will own the property). This account will have more going on that just this rental.

Do I need to set up another account designated to that property for the PM to spend from and have him deposit into the main account? 

OR 
Do I have him spend and deposit into the same one despite it being used for other business activities as well?

Thanks for your help!

[Michael Seeker]

There's many different ways you can set up accounts which would depend on what you and your PM are trying to accomplish.  If this person intends to ever become a reputable PM company, then they should have a business account of their own as well as proper accounting/management software.  Within that setup, you could provide them a starting balance (let's say $5000) and they would maintain that balance, paying out anything above it to you.  They would keep that money in their business account and the accounting/management software would show that you have a positive balance of $5000 unless they've netted any expenses against it.  The tracking of it could look something like this:

Balance: $5000
Repairs: $100
Balance: $4900
Rent: $1500
PM Fee: $150
Balance: $6450
Distribution: $1450
Balance: $5000